Macy’s Inc. is ready to reward its top executives nearly 1.3 million shares of stock, more than half of them to chairman, president and chief executive officer Terry Lundgren, if they can steer the company toward the head of retailing’s equity class during the next three years.
This story first appeared in the March 25, 2009 issue of WWD. Subscribe Today.
The compensation and management development committee of Macy’s board has approved a series of “Founders Awards,” restricted stock units based on the performance of the company’s shares in comparison to 10 other retailers over a three-year period beginning with the current fiscal year. If Macy’s shares perform better than the 66th percentile of the peer group, the executives would receive all of the allotted units. The number would dip down to 75 percent if Macy’s shares, including reinvested dividends, are above the 50th percentile but below or equal to the 66th percentile and to zero if “total shareholder return” (TSR) falls at or below the 50th percentile.
Lundgren could qualify for up to 666,666 units and four other executives — vice chairs Thomas Cole, Janet Grove and Susan Kronick and chief financial officer Karen Hoguet — for as many as 151,255. Macy’s shares closed Tuesday at $8.99, up 13 cents or 1.5 percent.
The 10 peer companies being tracked are Dillard’s Inc., Gap Inc., J.C. Penney Co. Inc., Kohl’s Corp., Limited Brands Inc., Nordstrom Inc., Sears Holdings Corp., Target Corp., The TJX Cos. Inc. and Wal-Mart Stores Inc.
In a regulatory filing with the Securities and Exchange Commission, the company said, “The use of relative TSR eliminates the need to measure the company’s success in its restructuring activities using internal standards, which may or may not be commensurate with changes in shareholder value, and instead measures success as determined by investor views as reflected in changes in shareholder value over time.”
However, while the compensation committee was happy to offer rewards based on performance, it withdrew several legacy perquisites. Senior executives and nonemployee directors will no longer receive an automobile allowance or leased car after June 30, and financial counseling and a company-paid senior life insurance program will end on Dec. 31. Additional merchandise discounts for executives and nonemployee directors will also end at the conclusion of the calendar year.